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[Opiate]

Are you sure? Doing a quick google search says that Activision made $1billion dollars profit in 2011 and 1.1 billion in 2012.

http://www.gamespot.com/news/activision-blizzard-profits-hit-11-billion-in-2012-6403613

Yes -- Activision is easily the success story of the bunch. Take 2 and EA lost significantly on the other end. Ubisoft is net positive but not by a large amount. The next biggest publisher coming in to this generation, THQ, is now completely out of business.

Consider a quarter, for example, where EA makes money,but Take 2 loses some. Activision runs a good profit but Ubisoft runs a moderate loss. The net total would presumably be a moderate profit. In the PS1 and PS2 days, all of these companies were growing simultaneously; now they grow at each other's expense. That suggests growth has significantly slowed or stalled.

 

[UrbanRats]

Regarding what Sony is aiming for, i'm wondering what exactly is Sony seeing in the streaming video idea.
I mean i think it's cool and all (even though i'll probably never use it myself) but listening to the Giant Bomb crew commenting on it, they said that these personality based commentary, that are not even necessarily about the game, but about the player (being funny or charming or pretty or whatever) are a faster growing trend; admittedly it's not like Youtube and Twitch aren't full of this people.

So maybe they [SONY] see that as a way to consolidate the "core" crowd, while at the same time enriching it, making it bigger.
When the Wii was a major hit, a lot of people suggested that those playing with the balance board, would've transitioned to more "core" experiences in time, though that didn't really happened all that much.

I'm wondering if someone marginally interested in gaming, might get more into it thanks to the "allure" of streaming induced popularity, with the advantage of it being really easy to set up.

Just a random thought.

Sony should probably find a way to let people monetize on them, though.

 

[shinra-bansho]

It is evidence of a stagnating market, not proof of it. Sony is not only a hardware manufacturer; they spend significantly on software development, and that has significant costs, as evidenced by the numerous closures of Sony studios within the last couple years.

Yes, Sony are also a publisher; but I think it confuses the issue to equate Sony the publisher with Sony the console maker with Sony the conglomerate. Sony the publisher does operate in the free-to-play space. Sony the conglomerate has a foot in the Android market.

Is the argument that Sony the publisher should be less risk averse in embracing free-to-play and bite-sized games for $1? As noted above they do operate in free-to-play and microtransactions.

Or that Sony the platform holder should be making a platform conducive to all publishers embracing the casual new world order?

Yes. It is a functional, reliable, but low margin business model.

Yes, that is common. Keep in mind that three systems in history have made money with this model. Off the top of my head, all of these systems have employed the razor/blade model:

And to my knowledge, only 3 of those had made any money at all; PS1/PS2/360. Otherwise, it's a long list of losers. Again, you can expect revenue, but profit expectations should be kept low. It has not historically been very profitable, and margins have only gotten thinner over time.

Are you defining margins in absolute terms or in percentage terms. Hypothetically, a $100 loss-lead on a $400 console to someone buying 6 games a year for a 5 year period, assuming royalties ~$6 amounts to a $80 overall positive margin. Would an $80/20% margin be low?

I don't think Sony can be Apple - wherein large margins are charged on hardware and platform royalties are also significant. They should be under no illusions that they can.

However, it presumably solidifies in Sony's mind that the strategy can and does work if executed well when two of those systems that did succeed on a razor/blade model were PlayStation systems and were also the 1st and 2nd best selling consoles of all time.

Yes, that's a possible approach, but again, Sony is bleeding everywhere. It isn't as simple as a single segment causing all their problems. The only reliable source of income over the last 5 years has been their insurance segment.

Sony has been rapidly jettisoning jobs, as you suggest. They've let go of 20-30k people over the last 5 years, which, again, is the equivalent of 5-10 Nintendos.

Is that not also reflective of how bloated Sony as a corporation became?

 

[Sorral]

Remember PS1 or PS2? They have been runaway successes. No core/hardcore/casual/true/untrue gamer bullshit. Just success. So, when we say " Is Sony making a mistake by betting the farm on 'true' gamers?", aren´t we just expecting it will be less succesful?

Sigh, its getting silly. Now you have to add PC numbers to make it equal? Well, than we had PC gaming during PS2, believe it or not. A market which is growing because of "casual" offerrings btw.

It is getting silly, yes. I don't know why it is hard to believe that the number grew and not shrunk. shinra-bansho said it a lot better: The market conditions were a lot better than in the 360/ps3 times.

 

[krypt0nian]

This is the smartest strat IMO. Back to a normal console cycle, which will still work fine even in the face of tablets/smartphones.

I'm one of the biggest proponents of iOS gaming, it driving the lion's share of my game time, BUT, and a very big but, it's not replacing my core gaming needs, despite the shift in the marketplace to more core gaming experiences on the iPad/iPhone.

I play iOS games mostly because they are with me all the time due to my iPhone. That they are often perfect slices of game time that fit into my day 17 ways to Sunday, is a nice bonus, but not the prime mover for me.

After that itch is scratched, and scratched nicely, I still have the urge to play full HD gaming experiences, many of which are SONY 1st party efforts. Now this has lessened in the last year or so, but that's mainly generational burnout, rather than a move away from consoles toward iOS devices.

This upcoming gen, they focus at first on the early adopters/core base, and then move toward the casual blue ocean, that I believe are also bored with last gen visuals, and may be ready for a new boss in town.

Or maybe not. No one knows. We're ALL guessing, but these are my experiences, and my views on them.

 

[Gamer @ Heart]

This is the smartest strat IMO. Back to a normal console cycle, which will still work fine even in the face of tablets/smartphones.

I'm one of the biggest proponents of iOS gaming, it driving the lion's share of my game time, BUT, and a very big but, it's not replacing my core gaming needs, despite the shift in the marketplace to more core gaming experiences on the iPad/iPhone.

I play iOS games mostly because they are with me all the time due to my iPhone. That they are often perfect slices of game time that fit into my day 17 ways to Sunday, is a nice bonus, but not the prime mover for me.

After that itch is scratched, and scratched nicely, I still have the urge to play full HD gaming experiences, many of which are SONY 1st party efforts. Now this has lessened in the last year or so, but that's mainly generational burnout, rather than a move away from consoles toward iOS devices.

This upcoming gen, they focus at first on the early adopters/core base, and then move toward the casual blue ocean, that I believe are also bored with last gen visuals, and may be ready for a new boss in town.

Or maybe not. No one knows. We're ALL guessing, but these are my experiences, and my views on them.

I agree, that smart phones and tablets won't replace the urge for traditional games, but the argument still stands that a huge portion of the market is now spending a giant chuck of disposable income upgrading their phone every two years or buying a tablet and their free time using those devices elsewhere. In a contracting market, it can't possibly help to have even more expensive consoles and games competing when all the publishers run themselves out of the business with shitty practices and management.

 

[Brad Grenz]

The 360 is where it is (in NA) BECAUSE of the 'Core' gamer. All of these reporters, analysts, company strategists & console makers that are betting on and chasing the fickle casual at the expense of the core, are in for a rude dose of reality this gen.

Everything from early adoption, hype, attachment rates, word of mouth and success rests directly on the support of the core gamer. It's a huge mistake to not focus a large majority of efforts on the core market, as not doing runs the risk losing the core focusing on you.

If the rumors surrounding MS's next console are true (always online,i blocked used games, much weaker system, focus on media entertainment at the expense of gaming, no changes to live), I would bet on MS losing a great deal of ground they gained this gen. I hope MS isn't overstating the importance of our gamertags/gamerscore by believing we will sacrifice our gaming experience for a bunch of numbers.

Exactly. What seems to be happening is Sony is doing the sensible thing and doubling down on core experiences in order to appeal to early adopters and typical year 1 & 2 customers for a new console. Obviously install bases don't get really impressive until you widen the audience, but the wider audience never buys when the price is at its highest point and the software library is at its lowest.

The way MS has been moving it seems like they are trying to target the group that would traditionally buy in year 3 or 4 of a console's life. The challenge there is living long enough to still be around in year 3 if Sony's strategy has captured a large majority of early adopters. And at that point the wider market will still probably make the safe bet by going with the better established console.

 

[jozero]

I'd say they nailed it. I don't want to be pitched yet another convergence do everything device. The $99 cheapo convergence box is already crowded with AppleTV, Rovi, etc. I like how they basically fixed every complaint with the PS3 (updates, load times, boot time) , added some features that are decidedly next gen (instant boot, better graphics, instant play downloads, watch other people's games). They are positioning it as the ultimate gaming box. If I want to game, go get a PS4. Everything you as a gamer care about in games it does well. As someone who ended up being extremely frustrated with the PS3, they did a great job of peaking my interest. I didn't expect this reaction at all. I still will wait if to see if the reality matches the promise.

 

[Opiate]

Yes, Sony are also a publisher; but I think it confuses the issue to equate Sony the publisher with Sony the console maker with Sony the conglomerate. Sony the publisher does operate in the free-to-play space. Sony the conglomerate has a foot in the Android market.

It doesn't confuse the issue; it reinforces it. We're looking at a situation with as much evidence as we can. Some of that evidence is highly direct; for example, the PS3's losses. Some of it is indirect but still informative, like software revenue and profit margins.

The important thing is that all the evidence (both direct and indirect) points in the same direction; it's unlikely that the PS4 will run high profit margins based on past history, evidence and precedent.

Are you defining margins in absolute terms or in percentage terms.

You almost always define profit margins in percentage terms.

Hypothetically, a $100 loss-lead on a $400 console to someone buying 6 games a year for a 5 year period, assuming royalties ~$6 amounts to a $80 overall positive margin. Would an $80/20% margin be low?

A 20% margin would be extremely high in this market. Even when Sony was profitable, they operated on 1-2% profit margins. That's normal for mature markets, be they electronics like PCs or commodities like toilet paper.

I don't think Sony can be Apple - wherein large margins are charged on hardware and platform royalties are also significant. They should be under no illusions that they can.

Fine, how about Samsung? If they can't compete with Apple/Samsung/Vizio/Etc. then they will be gradually pushed out of the market.

What you are essentially saying here is that Sony isn't talented enough to compete with the best players in the electronics market any more. There was a time when they were at the top of the market -- and some people were hoping they might be able to return there. If you are explicitly acknowledging that Sony has been permanently outmaneuvered by more savvy companies like Samsung/Apple/etc., then you are actually more pessimistic than these analysts are. They believe Sony is still capable of beating out the best companies in the business, and wish Sony would try; you are essentially suggesting Sony should admit defeat and accept their fate as a smaller company and no longer on the leading edge of electronics with the big boys.

 

[iamshadowlark]

Nice that gamasutra is joining in on the consoles are dead crowd.

But like most others who do, they provide nothing more than a shallow article, with not much in the way of concrete facts to support their claims. More like manipulative numbers. Why not provide data as to which part of the DD boom is due to the whole social empire (iOS/android/FB/etc) that they swear is swallowing gaming as a whole or which part is due the documented uptick of services such as, steam, origin, PSN, XBLA, etc that are more in line with a consoles capability and one part where Sony, Microsoft and even Nintendo is going to provide a heavy focus on? How about some scientific data that shows console gamers have said enough with the joystick and have picked up the iPad for all there gaming needs, instead of presenting the snake oil preposition that shows a seemingly regular end of generation console shift as a migration to the social gaming sphere? No why? Because it doesn't support the narrative they are trying to build.

 

[madmackem]

No the launch of a games console should be focused on its main buyers the gamer, whats the point in focusing on the casual they are fickle and what can they offer them from the off?, netflix streaming apps move kinect motion etc?. Wii was lighting in a bottle, i cant think of any other home console that has attracted the casual buyer from day one. They come later down the line when things are cheaper and you have a hook for them. Its like 30 years of console gaming never happened to people who write these articles.

 

[Vilam]

Tired of watching people chase after social/casual gamers. It's fools gold for the most part... sure you may see some nice uptick in cash initially, but there's no sustainable market there.

Good on Sony to go after the segment of gaming that's most dependable with their spending.

 

[madmackem]

Tired of watching people chase after social/casual gamers. It's fools gold for the most part... sure you may see some nice uptick in cash initially, but there's no sustainable market there.

Good on Sony to go after the segment of gaming that's most dependable with their spending.

Yeah i read an article which i cant remember where it was or who it was written by but the jist of it was ios isnt the pot of gold everyone say it is, it only for the select few and the race to free and the race to the bottom of the pricing scale was hurting.

I always look at the food industry, did fine dining go out the window when the fast food chains rolled into town?, no there is room in the market for both just like there is room in the market for both ios and consoles there is both cross over and not.Just because people buy ios games doesnt mean they will be in the market for a games console, and just because gamers buy cheap ios games it doesnt mean they will be giving up on the real full console experinces.

 

[shinra-bansho]

It doesn't confuse the issue; it reinforces it.

Then what exactly are you suggesting would amount to some sort of bold push towards the casual.

Low cost high margin hardware that plays low budget app-like games...?

A 20% margin would be extremely high in this market. Even when Sony was profitable, they operated on 1-2% profit margins. That's normal for mature markets, be they electronics like PCs or commodities like toilet paper.

Then given the perfectly plausible hypothetical - why wouldn't said gamer be a good target demographic?

Fine, how about Samsung? If they can't compete with Apple/Samsung/Vizio/Etc. then they will be gradually pushed out of the market.

What you are essentially saying here is that Sony isn't talented enough to compete with the best players in the electronics market any more. There was a time when they were at the top of the market -- and some people were hoping they might be able to return there. If you are explicitly acknowledging that Sony has been permanently outmaneuvered by more savvy companies like Samsung/Apple/etc., then you are actually more pessimistic than these analysts are. They believe Sony is still capable of beating out the best companies in the business, and wish Sony would try; you are essentially suggesting Sony should admit defeat and accept their fate as a smaller company and no longer on the leading edge of electronics with the big boys.

Pushed out of which market? The FB/waggle/iOS game consumer market? I really don't think they ever really had much of this market to begin with. If you mean the TV or phone markets then for the former, I could certainly see it happening. This is where the lumping of Sony's various businesses causes confusion. I thought we were here largely talking about the game business.

I have no problem with the idea that Sony (and Japanese electronics co's in general) are no longer well-positioned to lead the electronics world as Apple and Samsung currently do. I don't think that precludes them ultimately righting the ship and producing quality products that people will buy. And I don't really see how that affects the game business.

Unless one subscribes to the notion that there's been a mass exodus from home consoles to iOS/Android. And I don't personally, as I don't see the substitution.

 

[szaromir]

Yes, that is common. Keep in mind that three systems in history have made money with this model. Off the top of my head, all of these systems have employed the razor/blade model:

Sega Genesis
Sega Saturn
Sega Dreamcast
Turbo Grafx
Atari Jaguar
Playstation 1
Playstation 2
Playstation 3
Xbox
Xbox 360

And to my knowledge, only 3 of those had made any money at all; PS1/PS2/360. Otherwise, it's a long list of losers. Again, you can expect revenue, but profit expectations should be kept low. It has not historically been very profitable, and margins have only gotten thinner over time.

And 360 would have lost $2B in the first two years if the RROD debacle hadn't happened (they lost $3B in that period). It's a huge upfront loss, I don't think other consumer electronics companies have to sink so much money to launch new product lines. 360 did become profitable after they introduced the 65nm model, and eventually more than made up for that initial period, but sinking billions while having little certainty of eventual success is not too smart. Console manufacturers need to find a way to make the product attractive without relying on cutting edge microprocessors, and that's what Nintendo did with DS, Wii and to a lesser extent 3DS. WiiU didn't catch off though, but it's probably much smaller risk than launching an equivalent of what 360/PS3 were in 2005/6.

 

[Ywap]

Hopefully their efforts will pay off. If i could stand gaming at 30 fps i would support them myself.

 

[Brera]

Only fools think Angry birds will replace games like Gran Turismo or GTA or Halo.

"True" gamers buy more games, spend more on gaming and are more reliable and predictable.

Just look at CoD...you're telling me F2P and Angry Birds is bigger than that?

Sony are doing the right thing! Playstation was always a trojan horse, it's too soon to jumo to a out and out set top box.

 

[deviljho]

I have no problem with the idea that Sony (and Japanese electronics co's in general) are no longer well-positioned to lead the electronics world as Apple and Samsung currently do. I don't think that precludes them ultimately righting the ship and producing quality products that people will buy. And I don't really see how that affects the game business.

They are getting squeezed from all sides. Isn't that apparent? They need a homerun from somewhere.

 

[SpinningBirdKick]

Thinking this over a little more overnight and I believe that Sony are going after the "True"/"Core" gamer because they really don't have any other choice.

Casual gamers won't be willing to buy the console at initial launch prices because it will be too far out of the impulse buying magic price range around $200.

Not only that but Sony has no casual friendly titles that are strong enough to be system sellers. There's definitely no Nintendogs, Brain Training or Wii Fit type stuff on the horizon that the casuals would be clamouring for.

"True" / "Core" gamers are probably the only demographic that is willing (stupid enough) to pay early adopter prices for unproven titles and to buy on potential rather than for what the system is doing now.

Sony aren't doing the "True" gamers and favours here, they're just exploiting them for their own ends.

 

[shinra-bansho]

They are getting squeezed from all sides. Isn't that apparent? They need a homerun from somewhere.

Are you referring to Sony Corporation or Sony Computer Entertainment. Again, I don't see any substantial squeeze on SCE and the home console space from new players like FB and iOS, because I really can't see the substitution effect in play - I don't think the markets for these audiences has driven success in the console space, for Sony, and in general with the exception of the Wii.

I'm not seeing how designing a device around casual gamers would have provided a home run, because I don't think one really can. The "casual gamer" is far too enigmatic and fickle.

The Wii struck lightning in a bottle seemingly inadvertently. While Nintendo tried to design towards this market a second time round and so far it's falling flat.

 

[Terrell]

Yeah, essentially the divergence in view is whether the downturn is due to the end of a product adoption cycle or a mobile exodus. If it is a mobile exodus then really nobody wins; not the big three and not publishers or developers. But I don't really see mobile substitution happening, yet at least.

It makes the assumption that mobile gamers are completely sated with the mobile gaming experience. The success of the Ouya Kickstarter project indicates there's still plently of money that can be made in the home space for this market, if you approach it correctly. Ouya had some much money down upfront that make it tough to ignore.

Absolutely, that appears to be the case. Certainly the Wii U isn't the answer, as available evidence shows.

I'm not sure we can say that yet, when Wii U didn't really offer anything to both segments. NSMBU and Nintendo Land, the games positioned to sell the system, are neither hardcore nor "casual" games. They sit firmly in the nebulous in-between that the market defines very poorly.

NSMB not moving units doesn't surprise me, as it was never positioned as a system-seller in the first place; its success as a series has been predicated on an existing base of users. And Nintendo Land, by its nature, is a "core" game on the lowest rung, something intended for both audiences. But the problem again is it's something that would sell to an existing base, but not generate one. Core gamers are not going to buy a console for it, because it doesn't appeal to their needs exclusively and is written off purely as a casual game, whereas casual gamers see it as just complex enough to be outside of their skill range as a starter game to buy a console for.

I think we'd need to wait for a game that squarely attracts one market or the other before we can decide on what the evidence from that platform shows us.

 

[The Bookerman]

That last point seems like a very important one, to me. If the "core" or traditional market was safe and reliable while also simultaneously being high margin and highly profitable, then surely other companies would be tripping over themselves to enter this market. Every company loves the sound of a safe, reliable, highly profitable venture.

The fact that no one has shown any interest in entering the "core" market for 15 years -- and in fact if anything, Nintendo has shown a desire to move away from it -- is an important signal. It's a strong indicator that most people don't perceive this market to be very profitable; if they did, then new entrants would be popping up competing for our dollars. Instead, the market has slowly been consolidating.

Hmm nintendo has stated they wanted to focus with the core audience with the 3ds and wii U. They're not shying away from it. Hell, if they wanted to get away from that audience, why go out of their way to support bayonetta 2 and get Team Ninja with a re-release of Ninja Gaiden 3.

Sony aren't doing the "True" gamers and favours here, they're just exploiting them for their own ends.

Uh? this presentation was a love letter to developers. Developers get hyped: Get good games on the system. Gamers want good games. Buys system and games: Profit. I don't see anything that relates to exploiting the "core" gamers.

 

[deviljho]

Are you referring to Sony Corporation or Sony Computer Entertainment.

Sony Corporation as a whole has many compounding problems. Their gaming decisions can't be made or analyzed in a vacuum.

Again, I don't see any substantial squeeze on SCE and the home console space from new players like FB and iOS, because I really can't see the substitution effect in play

There undeniably is more competition for this form of entertainment, from all angles, then there was 5, 10, 15 years ago.

I'm not seeing how designing a device around casual gamers would have provided a home run, because I don't think one really can. The "casual gamer" is far too enigmatic and fickle.

You're not seeing "it" because no one can predict what shape the home run might come in. It's that it's doubtful that their current strategy will be that home run the Sony Corporation needs overall.

Hmm nintendo has stated they wanted to focus with the core audience with the 3ds and wii U. They're not shying away from it. Hell, if they wanted to get away from that audience, why go out of their way to support bayonetta 2 and get Team Ninja with a re-release of Ninja Gaiden 3.

The scope of Nintendo's business is different from the scope of Sony Corporation's business. Any particular type of underwhelming performance of the Wii U probably is more acceptable to Nintendo's balance sheet than a comparable performance for Sony - just considering a like-for-like scenario.

Ultimately, depending on the price of the PS4/Wii U and the future games for either system, your point reinforces that there is some type of market (no matter how small) that will divide part of the pie between Nintendo and Sony. That's called competition - we don't know exactly by how much, but Sony's slice of the pie will never be as big as it was in the PS2 days. And if the rest of Sony Corporation can't pick up the slack, what then?

 

[abic]

This topic is stupid. We've gone through this before.

Maybe this is something only people who've gone through 3-4 generations can understand but there's a strategy to broadening your audience. At its core the PS4 is a gaming machine. You start at the gaming audience. Then you expand outwards.

PS2 did it

PS3 did it

now PS4 will do it

 

[deviljho]

PS2 did it

PS3 did it

now PS4 will do it

 

[TheGreyHulk]

Sony focused on the gamers in their meeting and gamers are excited for the ps4. They didn't showcase to the casuals or investors because they're not the group who buy consoles at launch or very early in its life cycle. Games are the ones who adopt early and that's who your announcements should be tailored towards.

They didn't bet the farm on gamers, they're just focusing on their initial customers now and they'll show more things for the casual when it's time.

 

[Man-is-Obsolete]

I think it is smarter for Sony to go all in focusing on the core market, especially when presumably others are abandoning that market. However, Sony has to get better at offering a better range of titles. That's not to say they don't already do so, but they sometimes go long periods of time releasing M rates games and then a more family friendly title gets lost in the mix. It is a great sign that Knack is a launch window title, and of course MM is amazing at this market. They just need to keep building on that though.

 

[Midnight Bliss]

I'd like to know what games are supposedly directed at these so called "true gamers".

Are they the ones who want a quality Arcanum or System Shock 2 sequel? The ones who want a true Ultima Online sequel?

I realize the title of this topic was supposedly geared towards separating types of gamers but if by "true gamers" you mean people who play AAA games or JRPGs, you're going to need to dig deeper than that.

 

[Man-is-Obsolete]

I'd like to know what games are supposedly directed at these so called "true gamers".

Are they the ones who want a quality Arcanum or System Shock 2 sequel? The ones who want a true Ultima Online sequel?

I realize the title of this topic was supposedly geared towards separating types of gamers but if by "true gamers" you mean people who play AAA games or JRPGs, you're going to need to dig deeper than that.

Core gamer is a loose term for sure. It includes a large group that includes those millions that buy Call of Duty and those that buy JRPGs. It is a demo that sticks with products and continues buying for years to come. Casual gamers are the flimsy ones that will flock to a product that has generated a lot of buzz and is new and unique, however, they are also quick to abandon it. See Rock Band, Skylanders, Wii, etc.

The way I see it core gamers are sheep that you can keep around, fed, and happy so long as there is a steady supply. Casuals are like locusts, unpredictable, insatiable, massive in number, and will consume quickly and move on to the next thing.

 

[PatientRain]

I honestly don't think so: I think they're betting on the fact that there are people who want more out of their games than they can get from their phones with 20 minutes on a bus, or 5 minutes in a line. Even if they don't have 100 million people playing their 99 cent games, they'll have 50 million playing their 60 dollar games.

Don't get me wrong: I don't think it's black-and-white. Sony have said there will be 99 cent and free-to-play games on their machine; and they'll have the media services most expect now.

If their strategy really is something like appeal to the core primarily, and offer them the casual experiences that are also popular, I think they can be enormously successful.

 

[Opiate]

Then what exactly are you suggesting would amount to some sort of bold push towards the casual.

Low cost high margin hardware that plays low budget app-like games...?

Yes. The games don't need to be $1, mind you, I just wouldn't recommend bleeding edge. There's a pretty large chasm between what the PS4 is and 1$ iPhone games.

Then given the perfectly plausible hypothetical - why wouldn't said gamer be a good target demographic?

It isn't plausible at all. What you are suggesting has never happened in the history of video games outside of the Wii/DS. The PS2 range margins of ~5%, and that was proportedly the most successful game machine of all time. You simply do not understand profit margins if you think the scenario you just described is plausible.

If you mean the TV or phone markets then for the former, I could certainly see it happening. This is where the lumping of Sony's various businesses causes confusion. I thought we were here largely talking about the game business.

The game business in context. If Sony was an otherwise healthy company flush with cash and looking to invest in a new venture, that would suggest a different strategy for gaming than what we'd recommend for a Sony in financial trouble, bleeding slowly from all sides, as is actually the case.

I have no problem with the idea that Sony (and Japanese electronics co's in general) are no longer well-positioned to lead the electronics world as Apple and Samsung currently do. I don't think that precludes them ultimately righting the ship and producing quality products that people will buy. And I don't really see how that affects the game business.

These analysts believe Sony can still lead and not be a smaller electronics company making products primarily for a narrower demographic.

Yes, I agree that Sony can still be a company which exists and makes products people want, but that isn't the bar Sony is being held to. They were leaders, now they're not. Investors and analysts aren't so quick to accept that Sony just isn't as important as they used to be. They would like Sony to at least try to break out of the box they've been placed in by their more agile competitors.

You seem to be fine with a smaller Sony; analysts are trying to get them back in the limelight. This alone may explain the entire difference of opinion on where to go from here.

 

[yurinka]

Keep in mind that three systems in history have made money with this model. Off the top of my head, all of these systems have employed the razor/blade model:

Sega Genesis
Sega Saturn
Sega Dreamcast
Turbo Grafx
Atari Jaguar
Playstation 1
Playstation 2
Playstation 3
Xbox
Xbox 360

And to my knowledge, only 3 of those had made any money at all; PS1/PS2/360. Otherwise, it's a long list of losers. Again, you can expect revenue, but profit expectations should be kept low. It has not historically been very profitable, and margins have only gotten thinner over time.

As I know each separated unit of 360 sold started to be sold at profit at some point, but these profits never recovered the loses generated by the console during its early years (R&D, RROD, etc):
https://docs.google.com/file/d/0B0DDHjUUE122N1JOajBJb1Vwa2s/edit?usp=sharing

It was released late 2005.

 

[Opiate]

As I know each separated unit of 360 sold started to be sold at profit at some point, but these profits never recovered their initial loses:
https://docs.google.com/file/d/0B0DDHjUUE122N1JOajBJb1Vwa2s/edit?usp=sharing

This includes Xbox 1 losses. There's no perfect way to separate the generational costs, but certainly the 360 wouldn't have been responsible for the first couple years of losses, at the very least.

 

[yurinka]

This includes Xbox 1 losses. There's no perfect way to separate the generational costs, but certainly the 360 wouldn't have been responsible for the first couple years of losses, at the very least.

Was Xbox being sold years after 360 release? I thought it had a shorter life, instead of following Sony's tradition of keep selling the old console during some years after the release of the new one.

Edit : for someone with the original data, would be great to have an updated version adding the last FY.

 

[Bigmac1910]

Not at all, finally someone is thinking about us gamers who want to experience more than just F2P games and Netflix streaming. While I do game on iOS and Android, I mostly play games on my PC or consoles. I think the this current generation has been the worst, and I was ready to quit console gaming, but after the Sony conference I'm almost as exited about the PS4, as I was for the Sega Megadrive way back. Not excited about Xbox 720 according to rumors, but we'll see.

 

[shinra-bansho]

There undeniably is more competition for this form of entertainment, from all angles, then there was 5, 10, 15 years ago.

You're not seeing "it" because no one can predict what shape the home run might come in. It's that it's doubtful that their current strategy will be that home run the Sony Corporation needs overall.

In the handheld space there's an apparent effect. In home consoles, when one excludes the Wii market, there's been consistently ~10-11M HW units sold per annum for the last decade during the rise of iOS and FB.

The latter part is what I find illogical. You essentially reaffirm what I wrote - that one can't know what will catch on with this market. One can't foresee what will be the next casual craze, but one should try and design it.
----

It isn't plausible at all. What you are suggesting has never happened in the history of video games outside of the Wii/DS. The PS2 range margins of ~5%, and that was proportedly the most successful game machine of all time. You simply do not understand profit margins if you think the scenario you just described is plausible.

I understand what you're saying in a standard profit margin context. But my example is a perfectly plausible customer that ultimate generates positive margins over the long term from an initial negative margin on the hardware. Unless you're simply disputing the notion that these enthusiast customers exist and that they'd tend towards early adoption.

Why is this customer not worth targeting initially?

The game business in context. If Sony was an otherwise healthy company flush with cash and looking to invest in a new venture, that would suggest a different strategy for gaming than what we'd recommend for a Sony in financial trouble, bleeding slowly from all sides, as is actually the case.

Yes. The games don't need to be $1, mind you, I just wouldn't recommend bleeding edge. There's a pretty large chasm between what the PS4 is and 1$ iPhone games.

So... be Apple? But charge more for games and less for hardware?

If it was really as simple as releasing low-cost high-margin hardware -> get casuals -> profit, then I'm not sure why no one thought of it. But I don't think it's that simple. I don't have a viable strategy for "going after casuals" and I doubt anybody else does.

Which is why I don't see how it makes more sense to go all in on an unpredictable market on the hope that something catches on.

 

[yurinka]

Everyone who released an 'expensive' console targeted to hardcore during the first years. It makes sense IMO because I think they're the ones who buy it.

Then after several years in the market, once it gets 'affordable' makes sense to focus the family and casual market too.

Seems that Sony is following this same path they followed before several times. It always worked for them.

I don't see the point of trying to sell a $500 console to play F2P Facebook games, phone games or waggle games.

 

[Plinko]

Everyone who released an 'expensive' console targeted to hardcore during the first years. It makes sense IMO because I think they're the ones who buy it.

Then after several years in the market, once it gets 'affordable' makes sense to focus the family and casual market too.

Seems that Sony is following this same path they followed before several times. It always worked for them.

I don't see the point of trying to sell a $500 console to play F2P Facebook games, phone games or waggle games.

The PS3 certainly did NOT "work for them." They erased generations of profit.

 

[legend166]

Everyone who released an 'expensive' console targeted to hardcore during the first years. It makes sense IMO because I think they're the ones who buy it.

Then after several years in the market, once it gets 'affordable' makes sense to focus the family and casual market too.

Seems that Sony is following this same path they followed before several times. It always worked for them.

I don't see the point of trying to sell a $500 console to play F2P Facebook games, phone games or waggle games.

Except for, you know, the last time they did it.

 

[yurinka]

Except for, you know, the last time they did it.

The PS3 certainly did NOT "work for them." They erased generations of profit.

I thought PS3 was selling well at profit these recent years and that their gaming division started to show good numbers these later years, and that both PS3 and its games are going to be sold some years more.

And yep, let's forget that it outsold all the consoles in gaming history excluding some few of them, the half or which are also made from them. It's a total disaster

 

[yurinka]

sorry, dp

A suggestion to mods : it would be awesome to automerge double posts. I'd help morons like me who constantly make the same mistake when trying to quote more than 1 gaffer.

 

[Plinko]

I thought PS3 was selling well at profit these recent years and that their gaming division started to show good numbers these later years, and that both PS3 and its games are going to be sold some years more.

And yep, let's forget that it outsold all the consoles in gaming history excluding some few of them, the half or which are also made from them. It's a total disaster

1. It has been making profit recently, but not until after it literally erased generations of profit.

2. I have no idea what you mean by that last comment. PS3 isn't outselling "all the consoles in gaming history."

 

[Terrell]

I thought PS3 was selling well at profit these recent years and that their gaming division started to show good numbers these later years, and that both PS3 and its games are going to be sold some years more.

And yep, let's forget that it outsold all the consoles in gaming history excluding some few of them, the half or which are also made from them. It's a total disaster

Fiscal earnings don't tabulate previous yearly losses, the numbers provided are only for the year as a whole. Whatever they gained in recent years, take the losses they amortized in the previous years, add them up, then subtract the gains.

Dollars to donuts says you'll still have a net loss for the entirety of the generation.

 

[noobasuar]

If they were betting the farm on "true gamers" we would have full BC.

I'm not sure exactly who they're trying to target but I would have to guess anyone and everyone without any real focus on any one group.

 

[Man-is-Obsolete]

^^^^^Yea, no.....BC is important for a very small group, and even that group barely uses it.

PS3 had some apparent mistakes that seemed to be learned from this go around, and Sony has built back a lot of good will through first party offerings and playstation plus. Also having games like GOW:A, TLOU, and Beyond come out for the PS3 this year proves to consumers they will support their devices for the long haul, something I think Nintendo and even Microsoft have done a poor job of doing. So I think they are carrying some good momentum heading into the PS4, and are starting to win over people.

 

[Setsuna]

The PS3 certainly did NOT "work for them." They erased generations of profit.

I thought that was all a rumour started by analysts

 

[yurinka]

1. It has been making profit recently, but not until after it literally erased generations of profit.

So then according to your point MS is in a way worse position than Sony since they still need billions to recover the loses they had since started their division.

2. I have no idea what you mean by that last comment. PS3 isn't outselling "all the consoles in gaming history."

I also said 'excluding some few of them'.

As I know PS3 outsold all pre-Wii Ninendo consoles, the first Xbox and all the console made by others like Sega etc.

So out of this list if I don't mistake only has been outsold by:
-PS2
-Wii
-PS1
-Xbox 360

And it's possible that it ends outselling 360 somewhere in the future.

 

[yurinka]

edit : dp again sorry, I'm so fucking dumb

 

[Plinko]

So then according to your point MS is in a way worse position than Sony since they still need billions to recover from past years and never had profit in their division.

Microsoft makes a ton of money from Live subscriptions along with their console sales.
I also said 'excluding some few of them'.

As I know PS3 outsold all pre-Wii Ninendo consoles, the first Xbox and all the console made by others like Sega etc.

So out of this list if I don't mistake only has been outsold by:
-PS2
-Wii
-PS1
-Xbox 360

But you just listed half of the major consoles! That's like saying "My team is the best in the league excluding the 14 ahead of them."

.

 

[yurinka]

If you prefer it I'll say it in this other way:

I don't think that PS3 is a disaster because it's the Top 5 (maybe soonTop 4) best selling console ever, out of like more than a hundred of consoles that ever existed, which are listed in the link I provided in my previous post:
http://en.wikipedia.org/wiki/List_of_video_game_consoles